Prepare Cash Flow Statement for Nevada Estates

1. These are the following data from the accounting records of Nevada Estates:

Depreciation Expense 15,900
Payment of Income Taxes 24,500
Collections of Accounts Receivable 167,200
Purchase of Treasury Stock 40,000
Declaration of Stock Dividend 65,000
Loss on Sale of Plant Assets 8,400
Collection of Dividend Revenue 13,800
Payment of Salaries and Wages 83,600
Cash Sales 103,700
Net Income 61,200
Acquisition of Land 73,500
Payment of Interest 19,400
Interest Received on Investments 3,100
Issuance of Bonds Payable 500,000
Increase in Accounts Payable 20,300
Payments to Suppliers 173,600
Acquisition of Equipment by Issuing 50,000
Long-Term Note Payable ________

a. Prepare the operating activities section of the statement of cash flows using the direct method.

2. Comparative financial statement data of McDonalds follows:

McDonalds
Comparative Income Statement
Years Ended Dec. 31, 2003 and 2002
2003 2002
Net Sales $462,000 $427,000
Cost of Goods Sold 229,000 218,000
Gross Profit 233,000 209,000
Operating Expenses 136,000 134,000
Income From Operations 97,000 75,000
Interest Expense 11,000 12,000
Income Before Income Tax 86,000 63,000
Income Tax Expense 30,000 27,000
Net Income $ 56,000 $ 36,000
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McDonalds
Comparative Balance Sheet
Dec. 31, 2003 and 2002
(Selected Amounts Given for Computation of Ratios)

2003 2002 2001
Current Assets:
Cash $ 96,000 $ 97,000
Current Receivables (Net) 112,000 116,000 $103,000
Inventories 172,000 162,000 207,000
Prepaid Expenses 16,000 7,000
Total Current Assets 396,000 382,000
Property, Plant, and Equipment (Net) 189,000 178,000
Total Assets $585,000 $560,000 $598,000
======= =======
Total Current Liabilities $206,000 $223,000
Long-Term Liabilities 119,000 117,000
Total Liabilities $325,000 $340,000
Preferred Stockholders' Equity, 6%,
$100 Par 100,000 100,000
Common Stockholders' Equity, No-Par 160,000 120,000 90,000
Total Liabilities and Stockholders' Equity $585,000 $560,000
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Other Information

A. Market price of McDonalds common stock: $49 on Dec. 31, 2003, and $32.50 on Dec. 31, 2002.

B. Common shares outstanding: 10,000 during 2003 and 9,000 during 2002.

C. All sales on credit.
Required
A. Compute the following ratios for 2003 and 2002:

1. Current Ratio
2. Inventory Turnover
3. Accounts Receivable Turnover
4. Times-Interest-Earned Ratio
5. Return on Assets
6. Return on Common Stockholders' Equity
7. Earnings Per Share of Common Stock
8. Price/Earnings Ratio
9. Book Value Per Share of Common Stock

B. Decide (a) whether Wahl's financial position improved or deteriorated during 2003, and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.

C. How will the information you learned in this problem help you evaluate
an investment?